The Patriot Post® · Unemployment Benefits Don't Benefit

Early in the Great Recession, Democrats pushed to extend unemployment benefits from the normal 26 weeks to as many as 99, claiming, as Barack Obama did again just last week, that “extending emergency unemployment insurance actually helps the economy, actually creates new jobs.” Actually, no, it doesn’t.

In its latest working paper, the well respected National Bureau of Economic Research (NBER), the organization that determines when recessions officially begin and end, reports, “Most of the persistent increase in unemployment during the Great Recession can be accounted for by the unprecedented extensions of unemployment benefit eligibility.” The NBER calculates that these extensions have kept unemployment 3.6 percentage points higher than it would have been without the extensions. According to the study, “During the Great Recession, unemployment benefits have been on average at 82.5 weeks for approximately 16 quarters. … Translating this to rates, we would predict a rise in unemployment from 5% to 8.6%.”

As the NBER further explains, extended benefits have two main effects on unemployment. First, the unemployed do turn down jobs they might otherwise take either because the wages aren’t high enough or because they don’t want to lose benefits. Second, because some number of the unemployed chose benefits over work, overall wages rise, suppressing employers’ demand for labor – when labor is more expensive, employers buy less of it.

Of course, Democrats benefit most from this cycle because they’re portrayed by the Leftmedia as the party that “cares” while evil Republicans only want to “slash benefits.” Furthermore, most of the unemployed will never realize the macroeconomic reasons for their plight, leaving the Democrats’ BIG Lie as the most plausible explanation. Just take a look at the fact that labor force participation for blacks is at the lowest level ever recorded and then watch how blacks vote (again) this November. And so the cycle continues.